Shares in Flybe take off with Virgin talks

The troubled regional carrier, which flies some routes for SAS among many other operations, recently put itself up for sale.

After putting itself up for sale last week following a profit warning, Flybe has seen its shares soar today now that Virgin Atlantic is in talks about a possible takeover bid.

Part-owned by entrepreneur Sir Richard Branson, Virgin is reported to be competing with British infrastructure firm Stobart Group to buy the struggling regional carrier – and is interested especially in its take-off and landing slots at London Heathrow.

Flybe’s shares were up nearly 20% in morning trading, the Press Association reports.

A gathering storm of adverse conditions in the airline industry have hit Flybe, including declining demand, a weak pound and a €33 million hit from fuel costs.

The Exeter-based carrier – which among other things flies with five ATR72-600s for SAS – has 78 aircraft operating from smaller airports such as London City, Southampton and Norwich, flying to destinations across the UK and Europe.

Just yesterday, Cornwall Airport Newquay announced that “after many years of development”, a new four-times-daily route between Cornwall and London Heathrow with Flybe would launch on March 31 next year.

Feeder traffic
Flybe carries around eight million passengers a year and Virgin would want to attract customers onto its long-haul network via Flybe’s domestic routes.

Flybe and Virgin already have a codeshare that allows Flybe customers to continue travelling on the same ticket on Virgin Atlantic’s long-haul routes from Heathrow and Manchester.

However, unions have already voiced worries over the impact of a sale on Flybe’s 2,300 employees.

Last week, the carrier posted a rise in half-year underlying pre-tax profits to £9.9 million (€11.2 million) from £9.2 million the previous year, aided by ongoing cost-cutting. But statutory pre-tax profits more than halved to £7.4 million.